February 2021 by Professor Robin Room. From SHAAP (Scottish Health Action on Alcohol Problems).
Scotland has made progress in reducing harm from alcohol and an important part of that approach has been attention to regulating the price, availability and marketing of alcohol, known as the World Health Organization’s ‘Best Buys’. However, the Scottish off-trade alcohol market remains lightly regulated in comparison to many countries. Here, Robin Room discusses international examples of alcohol monopolies.
What is an alcohol monopoly? There are many variations
There are many versions of government alcohol monopolies around the world. It’s a good idea to look at the experience in different places with different models. The monopoly can be on all alcoholic beverages, or just on some of them. It can be at any or all of: the production level, the wholesale and importation level, or the retail level. Within the retail level, it can be of on-premise consumption (taverns, etc.) or purchase for off-site consumption (liquor stores, etc.). It is also possible to have a system which is partly government-run and partly private enterprise.
Before about 1850, when governments monopolised all or part of alcohol sales, the motive was primarily as a source of revenue. Alcoholic beverages were an attractive product which people would buy at prices considerably above the cost of production and distribution. In those days before income and general sales taxes, profits from it could be a considerable part of government revenue.
In the late 19th-century temperance era, as attention increased to the harms to the drinker and to others from alcohol, government monopolisation of the market became established as an alternative strategy to reduce the harms, instead of prohibition. Staffed by government employees whose paycheck did not depend on how much was sold (“disinterested management”), government monopolies with a primary goal of limiting the harm from alcohol became established and proved themselves in a number of countries. Typically, retail alcohol monopolies have fewer outlets than in a privatised system, and are not open late at night – both factors which keep down the rates of harms from drinking. The staff of a government monopoly store have a regular job paid at civil service rates, and are not under pressure to serve those who are under-age or already intoxicated, or to encourage customers to “drink up” and order more. The government typically gets more revenue from a monopoly than from taxes on a private system, but this doesn’t mean the retail prices are necessarily higher, since the private profits in a private system are gone, and the multiple outlets and long opening hours are reduced. Indeed, when government alcohol monopoly systems have been privatised in north America, people have commonly assumed that the retail prices will drop, but the repeated experience, against those assumptions, has been that they actually go up.
Read the full blog post on SHAAP’s website: https://bit.ly/SHAAPBlog-Feb21.